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Posted to Web: October 01, 2000

Permanent Link: http://www.urban.org/url.cfm?ID=1000307

This paper examines the effect of changing state policy, such as Medicaid eligibility, payment generosity, and HMO enrollment, on provision of hospital uncompensated care. Using national data from the American Hospital Association for the period from 1990 through 1995, we find that not-for-profit and public hospitals’ uncompensated care levels respond positively to Medicaid payment generosity, although the size of the effect is small. Not-for-profit hospitals respond negatively to Medicaid HMO penetration. Results suggest that public insurance payment generosity is an effective but inefficient policy instrument for influencing uncompensated care among not-for-profit hospitals. Further in localities with high HMO penetration or high penetration of for-profit hospitals, it may be necessary to establish explicit payments for car of the uninsured. (Inquiry 2000 Fall; 37: 253-267).

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